S&P Revises GFI Group's(GFIG) Counterparty Credit Rating to 'Developing' Following Merger Termination

Standard & Poor's Ratings Services said that it has revised the CreditWatch implications on its 'B' counterparty credit rating on GFI Group Inc (Nasdaq: GFIG). to developing from negative. At the same time, we also revised the CreditWatch implications on our 'B' senior unsecured rating on GFI Group to developing from positive. Both ratings had been placed on CreditWatch on July 30, 2014.

"The CreditWatch action follows GFI's announcement that it had terminated its merger agreement with CME Group Inc. (NYSE: CME) because its shareholders did not approve the proposed merger. At the same time, GFI's board of directors announced that the firm would explore strategic alternatives that offer the company's shareholders maximum value for their investment," said Standard & Poor's credit analyst Sebnem Caglayan.

As of Feb. 5, 2015, BGC Partners' (Nasdaq: BGCP)(a wholly owned subsidiary of Cantor Fitzgerald) all-cash tender offer to acquire all of the outstanding common shares of GFI Group Inc. that it does not currently own for $6.10 per share has been extended until Feb. 19, 2015.

If GFI is purchased in its entirety by a more creditworthy firm, and that firm assumes the company's outstanding debt, we could raise our ratings on GFI, including both its counterparty and issue-level credit ratings. Alternatively, if only a portion of the firm is sold, such as its software businesses Trayport and Fenics, and the remaining GFI Group's business risk profile is significantly weakened due to the loss of diversity and a higher dependence on transactional volumes, or if its financial risk profile worsens due to increased leverage and a lack of tangible equity, we could lower the ratings. Furthermore, a sale to, or merger with, a firm that is less creditworthy than GFI may also result in a downgrade.

We will continue to analyze the impact of any strategic alternatives the firm may announce over the next couple of months. We expect to resolve our CreditWatch on GFI Group based on the outcome of BGC's tender offer, or when we receive additional clarity about the nature and financing of any strategic alternatives the company may pursue.

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